Funda & Quant - BottomUp

Trading philosophy. Reflexivity. I believe in the ineffectivity of the financial markets and in the boom-bust processes. The theory of efficient market says that the price fluctuate around the equilibrium that is the value of an instrument. The theory of reflexivity says nobody knows the exact value of an instrument since the fundamentals are affected by the price. But there are not always boom- or bust-cycles; in most cases the prices fluctuate between levels where the random walk theory can be right. Furthermore, the market participants buy- & sell expectations which can be rational and irrational too. The question is if these expectations have already been built in the price. Because of this level of uncertainty the timing and risk management has a very big role. Tools. Effective combination of fundamental & quantitative tools. I think the two cannot be separated from each other. The general direction and intrinsic value of an instrument will be determined by a deep fundamental analysis (using bottom-up approach) and the actual supply and demand power by quantitative (and "technical") analysis. Risk management: The risk management methodology is conservative, two approaches are in use; - Active diversification: A financial instrument can have a max. 25% proportion in the total portfolio. - Stop-Loss: I cut the losses and leave the winners. This approach will result many small losses and a few bigger winners limiting the drawdowns and leaves the opportunity for an appropriate return on the long run. After a 10% minus the position will be closed automatically but it is not obligatory since it can be closed earlier.